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Welcome to Advocate Finance, your trusted broker in securing HMO property mortgages!
As established commercial finance brokers, we understand the unique needs of property investors and business owners. We are here to provide tailored financial solutions that help you achieve your goals.
Whether you are looking for a HMO property mortgage, loan or refinance, we cover all aspects to ensure your success.
Houses in Multiple Occupation (HMOs) are properties where two or more households share a house and its facilities such as a kitchen, bathroom and toilet.
The HMO mortgages and lenders available depends on the size of the property (number of rooms), the licensing requirements and the planning permission (C4 residential or Sui generis).
On top of the type and size of HMO, the lenders and mortgage products available depends on the applicant’s experience as a landlord.
You will see in the definitions above that the main criteria are the number of tenants and the number of floors in the property.
It is important to know that although the above definitions are correct, each Council has the authority to change them. We have come across a council in the past, that requires HMO licenses for properties with as few as 3 tenants and only 2 floors.
Using the services of a broker that understands how the property is valued is crucial as it affects the amount you can borrow. Most lenders will value the property as one tenure (freehold or leasehold), called a vacant possession valuation.
Our mortgage brokers will carefully consider the suitable lenders for your circumstances depending on how much you are looking to raise relative to the value of the property. But the property’s value can differ depending on the valuation methodology the lender instructs the valuer to use.
With respect to HMO properties, the biggest difference is whether the lender will use a vacant possession valuation or a commercial valuation.
Vacant Possession Valuation | Commercial Valuation |
This method is also known as a bricks & mortar valuation and is based on the current fair market value and local comparables, so is not always a favourite method when it comes to HMO properties. This is because the property will not be valued on a yield basis taking into account the rental income. | This method is also known as an investment valuation. The ultimate goal and reason for proceeding with a commercial valuation on a HMO is because it can provide a higher value on the property. This is because the property will be valued on a yield basis, which takes into consideration what rental income the property is producing. |
Advantages of HMOs | Disadvantages of HMOs |
Overall Yield and Income Sources: HMO properties typically offer higher overall yields compared to standard buy-to-let investments. This is due to the dual income streams from multiple tenants. | Property/Area Restrictions: Not all properties can be converted to a HMO due to restricted laws in some council areas – referred to as an Article 4. |
Tenancy Types: Access to lenders who will lend when the HMO be let on one AST (assured short tenancy agreement), which is typical of student lets or multiple AST’s (we have access to lenders who have no maximum limit on the number of AST’s). | Lenders: There are less lenders that offer financing for this type of property. |
Property Types: All HMO licencing and planning classifications are considered. All HMO configurations are considered (multiple kitchens, kitchenettes & bathrooms). | |
Loan to Values: 100% HMO mortgages with an additional mortgage. 80% HMO mortgages as stand-alone mortgages. |
We are experts in arranging mortgages for Houses in Multiple Occupation that require a licence. We have a choice of 7 HMO mortgage lenders that are very active in providing HMO finance.
The choice of having 7 HMO mortgage lenders allows us to arrange HMO mortgages from 3 rooms up to an unlimited number of rooms. And at least 4 of these lenders are on restricted panels, therefore only selected brokers have access to them.
Expertise and Experience:
Tailored Financial Solutions:
Competitive Fee Structure
Comprehensive Range of Services:
The typical fees are
A bespoke illustration will be provided for your individual circumstances to provide clarity on all fees and charges prior to commencing the process. This is free of charge
Typically, HMO mortgages require a deposit ranging from 15% to 35% of the property’s value.
NOTE: The lower the deposit, the higher the interest rate will be. If you’re looking for a lower interest rate, a higher deposit will be required.
The interest rates depend on the amount of the loan and the loan to value (LTV) being requested.
The loan to value represents the risk to the lender; the lower this is, the lower the interest rates.
Some HMOs will require planning permission, depending on the size and number of tenants.
There are certain checks and rules that need to be kept in mind with HMOs. A few to state are:
Our advisers offer a free consultation, so please give us a call or use the “Get in Touch With Us” form at the end of this page
Important Information
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
We are a credit broker not a lender.
Advocate Finance Ltd, registered at 55 Crown Street Brentwood, Essex CM14 4BD. Company Register number is 05579380. Authorised and Regulated by the Financial Conduct Authority. Our FCA registration number is 592830.
You can check via www.fca.org
We are registered with the ICO, Z1654205 and you can check via www.ico.org.uk.
We conduct both regulated and unregulated business and therefore not all products provided through us are regulated by the Financial Conduct Authority. We source mortgages and loans from a panel of lenders.
We may receive a commission that will vary depending on the lender, product, the amount borrowed or other permissible factors.
Advocate Finance is a mortgage and finance brokerage firm that specializes in securing loans and mortgages for various types of properties, including single properties, large portfolios, commercial sites, and development projects. They assist clients regardless of credit history, circumstances, or legal ownership, aiming to provide tailored financing solutions